hold economy hold jobs. you know it's like back in the dust bowl days you know they have that woody. guthrie woody guthrie you know going around town to town with a little guitar talk about you know shellacked bangle and do gold well that's what we're going to talk about you know i was inspired by looking at the story from los angeles where they're selling three billion dollars worth of bonds to fix potholes now there are so many potholes there because they actually haven't fix the roads for up to sixty years in some places so they're piling on taxes in order to pay for all of these past few decades where instead of spending a very small amount to keep the roads maintained during the whole process the queue the costs are massive because they let this whole system go to rot so they have to dig up all the roads and repave them so this is what we have in our financial system education system eco system everywhere you look is like we could have just spent a little tiny bit more and save the system rather than pile everything on to these

children so first off since the mid one nine hundred ninety s. american universities have raised their tuition five times as fast as inflation that's enormous that's an incredible rise and it puts the entire generation into debt and they end up doing jobs like being drone operators that pay a lot of money to pay off the student debt by killing students in other countries that's how those other students of the countries end up having not to pay their student loans is that american students drone them that it really works out well for everybody well this is why we have over one trillion dollars in student debt outstanding now a lot of that has emerged since they have conned me collapse because we've also hollowed out our jobs system we don't have jobs anymore so people are just going to university because the government apparently is giving free money well ripping off young america the college loan scandal the federal government has made it easier than ever to borrow money for higher education. saddling

a generation with crushing debts and inflating a bubble that could bring down the economy so just like the u.s. government underwrites most mortgages now in the united states they also underwrite the majority of student loans well these student loans unlike those mortgage debts you can't walk away from you can't ever escape them from bankruptcy so the average student is now graduating in america with debts of between twenty seven thousand and forty thousand dollars but as matt taibbi in this piece points out the government is raking it in they're planning on earning huge amounts of money over one hundred eighty billion dollars over ten years a lot of it they say if the if the student defaults the former student defaults they actually get to add twenty percent more so they're like a subprime lender now you know what i found fascinating about the met was you describe gilding so these universities like larry over there the new york university my alma mater they borrow billions from the government near zero percent and they use that money to guild or to create the dorms to luxury dorms so you have

these kids showing up they have sex and drugs and drink for four years and then they get out of this gilded university with forty thousand dollars in debt it's like a bad trip to las vegas you know that movie hangover the next one should be set and why you in new york city four years later you wake up with this enormous debt hangover having you know impregnated five or six people including your professors and you're walking around there like a dead zone b. actually that tell you b. does talk about this so like who's raking it in because of that so once again contractors the so-called you know people around washington d.c. and connected are raking it in thanks to this essentially free money from the government for them first in line are the colleges and universities and the contractors who build their extravagant athletic complexes hotel like dormitories and god knows what other campus embellishments for these little regional economic empires the federal student loan system is essentially i'm. mass of an ongoing

government subsidy once funded mostly by emotionally vulnerable parents but now increasingly paid for in the form of federally backed loans to a political constituency low and middle income students that has virtually no lobby in washington right well this is why you don't have any social unrest amongst the youth in america you know the one nine hundred sixty s. the cultural revolution the youth revolution they stopped the vietnam war so why hasn't the iraq war been stopped afghanistan war the all the occupations by america around the world how come the earth is so acquiescent to all of this going on is because they're heavily into debt and the quality of the dope has gone way down well actually we have another headline here regarding that because they aren't where are the revolutions where are the up uprisings about these massive debts for which they can't escape they could never escape even if they're ninety and they haven't paid off those debts they've got to pay back the federal government who can by the way just take their property and take their paychecks forever eight reasons young americans don't fight back how the us crushed youth resistance so it starts

off with the two thousand and ten gallup poll where they ask americans do you think the social security system will be able to pay you a benefit when you retire among the eighteen to thirty four year olds max seventy six percent of them said no and yet they continue to pay their social security taxes every week every month out of their paycheck it goes there and they they know it's taxation without representation because they'll never they believe receive that money back it's like a really bad version of crowdfunding so here you have millions of students who are paying into crowdfunding a retirement program that will never exist so it's worse than even putting up five bucks to see a spike lee movie and getting your name on i.m.d.b. for nothing here they're loaded with debts from student debts and by the way many jobs in america even like at mcdonald's or retail shop you need a degree to get those jobs because there are so many unemployed former college students people with degrees in. fact two hundred eighty four thousand americans

with a college degree or higher work for minimum wage last year up seventy percent from ten years ago so it's not leading to more income it's just you've got you're literally an indentured servant now you're working for minimum wage you have huge student loans to pay off on that minimum wage you can never escape those debts you're still paying your social security taxes which will never receive back you're just financing these people that left you a system with all these potholes well you know i mean you need four years of college to work at mcdonald's on the first two years they cover putting the paddy on the grill and then years three and four they teach you how to flip the paddy over well and the other thing that is remarkable about this so here you have a dilapidated infrastructure system you have a dilapidated education system all more and more expensive more and more debts loaded onto those who have no lobby as they as you pointed out they don't have lobbyists in washington d.c. to get the government to do their bidding and then we have this have my the u.s.

spends pathetically little on infrastructure compared to the rest of the civilized world so compared to the rest of civilized world america is at one hundred forty three in terms of how much they spend on infrastructure the u.k. is at one thirty nine now these are the two nations however where they have huge student fees tuition fees compared to europe compared to hong kong asia where the fees are much lower or subsidized or free by the government and yet they're also not investing in the future because as the cia points out what is fixed investment they call it records total business spending on fixed assets factories machinery equipment dwellings and inventories of raw materials which provide the basis for future production so the governments themselves in the u.s. and u.k. are not actually investing in the future of the country but you the young person is investing huge amounts of debt it all comes down basically to a function of. speculators around the world is to create

a futures contract so all the student income that would have been produced with a productive viable society of well educated students has been sold forward effectively with a futures contract in the form of him burdening the students today with forty thousand dollars worth of debt all the agricultural production in all these countries has been sold forward using agricultural futures contracts all of the benefits of having a viable bond market has been short circuited and brought into the present for speculators to make huge fees and bonuses right now by selling forward any benefits that would have been occurring over the next twenty years so using a futures contract or a derivative every benefit an ecological service to planet earth provides us an educational wellbeing that having a well educated society would give us has been sold forward and pocketed today by corrupt kleptocrats on wall street in the city of london and the result is armageddon it's debt again it's the bond apocalypse and it's all crashing forward it's simultaneously it's almost as if planets are colliding there's

a planet of debt that lives in a parallel world that is circling planet earth that's on a collision course so one needs to collide not even prince will be able to write a song about it it's beyond the raspberry parade i can tell you well beyond. well you bring up a good point there to the bomb pocalypse so this is the other thing that has not even better addressed is that the baby boomers who left behind this potholed economy this pot will the environment financial system potholes of derivatives flash crashes they've also been able to do that in a bond bull market so interest rates have been declining for thirty years now these young people who are piling on these debts who one day presumably have to have children and homes and stuff like that the interest rates are going to be rising for the next thirty years not you make a good point in terms of the past forty years since the u.s. went off the gold standard and yet the rise of the central bank as an activist bank we went from having the central. being lender of last resort to the central bank

being buyer of first order so every single bad debt that's come into the system a central bank is bought which is enabled for there to be a thirty year bull market in bonds which means interest rates have gone down for thirty years every single mistake every single pothole every single crumbled in initiative in foreign policy blunder has been financial lies securitize a sold forward with the help of lower interest rates but starting a year ago as i predicted would happen almost within two weeks exactly when i said it would happen interest rates have now begun a secular move higher which means bond prices are now entering a secular bear market of lower prices so all of this canola longer be re financed so we're going to have as bob prechter says eighty flay cheri apocalypse i believe you're going to see a lot of money spinning into gold that's right different that's where opinions differ but we agree that the parallel debt planet is colliding with planet earth in real time and wait for the prince song because this is going to be a good one well actually they do in the story about not being the rolling stone

where how the government is making huge amounts of money from the students and the student debts but you know there was this deal struck where they're going to keep interest rates on the student loans at three point six eight percent for the next year but they're projecting that they're going to go up to seven percent in the next five years so where does it go from there after that well exactly they the interest rates you know during the period of previous to paul volcker coming into central bank or america interest rates on the ten year want to fifteen sixteen percent they're currently you know people are panicking that they're almost at three percent up from one point four percent so they've doubled in the last year people are panicking that this throws the entire mortgage market into disarray it means stocks are earnings won't be coming in as people thought they were it means student loans are going to be adjusted upward it means all the loans that people have adjusted to all of the elements in society that they've borrowed against going to be adjusted higher and so now with a three percent move people are panicking but it's well within the historical. norm

to see those rates go to five ten as high as fifteen percent which means that the debt market loses sixty seventy eighty percent of its principal value so all banks are insolvent weak they're insolvent today but they're being held they're being held aloft with quantitative easing which has a sell by date it has an expiration date it can can't go on forever and that is what we're talking about the bond apocalypse which it's happening it's happening now in real time it's happening now stacy herbert the bond pocalypse is here well that's why i call it generation y'all better do a runner you know better do a runner all right well we got to say goodbye addie asked which i think you say to for the second half of.

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they just need to review the economic ups and downs in the final months day the london new york sang i and the rest because i think the case it will be everything we call today. welcome back to the kaiser report imax guys are timed out of turn to iona big young money blog dot co dot u.k.

i don't know if the first up we've been talking about the u.s. student debt problems how about the u.k. what's happening there well the u.k. has a very similar problem i think in times of a whole generation at risk of being put off going tina vassie and we can see obviously what the inside that that would be i personally think that if it helps young people to think more about what they're actually getting a vast sea and it prevents degree inflation from getting even more out of control then it will have an unintentional benefit actually because i think that the governments prior to this one have been very keen on promoting university as the be all mental for a lot of young people and we know that it is and we know that there are other options that we know that there prentiss ships that there's vocational training and so you have young people going to university coming away with that huge step i mean we're talking. about fifty three thousand pounds that's

a very typical figure this being quoted i presume you are saying it's forty thousand dollars people leaving one day you're saying fifty three thousand pounds in debt that they're living so roughly equivalent to this is seventy seventy five thousand dollars or fifty percent more than even in the u.s. yes seems like the education system in this country along with the health system and the transportation system it seems like it's become captured by these city financier's who are turning education into a way to securitize loans or to create great income for them but from what i understand it's not doing much to improve the educational standards in country well universities are businesses and that. one of the reasons why you're seeing a disparity in fees between u.k. students and foreign students what they're having to pay is a whole lot more and obviously that creates the incentive for universities and it may persuade some not to take on more foreign students as

a result but the problem is that they are businesses and they do have to therefore offer value for money so if they're offering courses the not qualifying young people to get jobs when they leave i don't really think they're doing that but there's not a notion here in the u.k. that education is part of the i guess you could call it the social contract almost that the state is interested in educating their young population because as an investment in the future and to burden that generation with huge debts is going against that. and so as the state sailed in their mandate or such as mr saying it has to be a business there needs to be consideration to the end going it out going cash but the social contract people expected that from the government as a way to increase the overall call at the aggregate i.q.

of the nation you know as an investment in the country absolutely i agree that any investment in a and e. spending on education is not necessarily a drain it's an investment and you have to ring fencing certain parts of the state budget like the n.h.s. but that same protection isn't always affords it's higher education we've got state schools here so there is the huge amount of investment put into those but you are always going to have a tiered education system particularly with universities you are always going to have. ivy league universities as we call them here like oxford and cambridge that are never to be going to have more demand from students it's going to be more competition. for certain courses especially meth the law and that's only going to get more tough in the future now that we have higher university fees coming in all right let's just put this into context or start young money blog dot co dot u.k.

what what is the focus of that of that blog of what you're work does i don't just cover my specific age group i've discussed financial issues in relation to children and also to those who are in their thirty's who fall into the first time by kathleen because i think the average age of the past time buying u.k. without any parental help is thirty seven so my book up is anybody really who's starting out in life you need guidance and solidarity when it comes to finances because there isn't much help that the media is focused on it's cool which are older and it's the same with politicians that voted the old and sadly we do have policies tailored to that old. electorate ok the younger demographic the most recently have been visible with campaigns like occupy wall street. was also active here in the u.k.

yet but this is not your focus on more losses to education in matters of money is not certainly in the same camp as the occupy movement but it seems like the generation you have similar frustrations generationally speaking is there an overlap and is there anything from that recent movement that you identify with and what you're doing and i guess the question is aside from the nuts and bolts of money there's a political dimension to this absence you get into that when you're what the work that you do you call void it i've written blokes in the past that all kinds of issues if you're talking about the youth and. employment issue you can't help but discuss where you know farm workers fits into that so political dimensions always fi chair in any discussion about young people and money and coming about to

be occupy wall street movement i was in support of those because i think you can help us to find anybody that says the current system isn't broke in some way i mean you only have to look at the highs and situation that we have here in the k. it's completely dysfunctional you've got a whole generation who are being looked at the highs in mark effect because they're spending so much on rent and we haven't done to supply of housing and it's not keeping up with the demand so the system is broken some way and i understand why young people are getting frustrated they're starting to add those concerns and hopefully mediums like blogging help them to have a platform that they wouldn't otherwise have ok so in the u.k. all these issues they overlap but they come together under a institution called the bank of england and they have a new governor now mark carney he's come in from canada with these talks about things like he wants to keep interest rates low for the next two or three years

so-called forward guidance yeah some argue that this is extremely damaging because it rewards speculators who are borrowing at these incredibly low rates and causing a lot of economic mayhem and it penalizes savers people who are actually working hard putting money aside and saving that money so is there are it seems to me there's a gap in the educational marketplace with tween let's say the youth in the u.k. and their needs and their aspirations and understanding how those aspirations are being sorted by institutional fraud at the central bank level under the leadership or non leadership of mark carney well it doesn't just affect young people thought. if you've got low interest rates that penalizes people who are nearing retirement who would have lived off the income generated by interest rates on their savings accounts and now you can't find a single savings account the last time i checked anyway you can't find

a single savings account on the market that beats inflation so you have these gee who barry is of inflation and low interest rates they're really through thing say the moment and as i said it doesn't just affect you know people that sell to people with well let me let me put this question to you they say david cameron of the coalition government made an announcement they said the economy needs to be completely reset and we have two choices we're going to either let the pound be absorbed by some european wide currency like the euro and we're going to try to keep interest rates low for the next twenty years we're going to lose our sovereignty and we're going to continue feeding speculation more b. we're going to raise interest rates in the short term to five or six percent and it's going to be gut wrenchingly difficult for two years or three years but on the other side of that will have sound money policies and growth as a new generation of britain how do you feel if you've given those two choices well

any pose the that would raise interest rates so that savers are motivated i would support that policy because ok the housing market would crash and you'd have like iceland and the pound would also go through a wall they would go through turbulent period are you willing to david tell you're telling the administration saying i'm willing to take the hit you don't need to mollycoddle me i'm strong let's rectify and reset the scania that's in the sustainable way are you as a young british citizen are you ready to accept that or do you want to take the other route that he wants to go down which is twenty years of a lost decade like japan where spending has been completely suppressed. you mean well where the maze of these speculators have been serviced and sacrificing the needs of the well being of the overall population what coming back to the previous point about whether we have the highs in crash oh no then maybe we do need to reset

the highs a market in that way i'm not saying that that is the way forward and it's not a member for of all housing i think that i was of our form of the gotta be cheaper so we someone's got to lose i think so you wouldn't believe the the just continuous upward trajectory that we've seen in the market in the past ten fifteen years where prices they haven't stopped they've just kept rising and rising wages are going nowhere so absolutely economic growth is not there is pure speculation absolutely but the other way that we rectify that situation i think is to have a reasonable level of. waited for people in the u.k. we have minimum wage there is the argument that here in london where the cost of living is so much higher there ought to be a london living wage in ny gree with that because once you've got caps wages which is what we've got at the moment you are inhibiting people from saving and then you've got a generation not able to get on the high thing. because high prices just keep going

up and up and what also still program the zero hours work is not just slave labor well i thought it was some of the there i was contract zero hours contract this allows corporations do precisely have people working for nothing it just is part of a general movement i think on the part of companies to. office less rights i guess and i feel like they're being attacked by a certain entrenched class of kleptocrats no i just think that young people don't always figure in their analysis of what's wrong with the economy and that's what's wrong we need people who on television in newspapers in blogs arguing the case be young people a lot more if we're going to have more balance in economic decision making ok fair enough i own a bed thanks so much for being on the report thank you. ok not going to do it for this edition of the kaiser report with me max geyser and stacy herbert i'd like to

thank our guest iona bain young money blog dot co. ok if you'd like to get in touch tweet us a kaiser reported to next time i got a thing by oh. ok . i do have a crock it welcome you to ted you're all of virginia edge a little while in the middle of the chesapeake bay on the virginia shod. county. rampage here all in the chesapeake bay probably one of the best areas in the country for us. and your island before the channel was. here. way up there. as go all. right here are some of the headstones from graves that for you this is a fruits that's what we don't want happen to taint your all and we want to get some

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